Sorry (Poor) Kids: The Road From Rags To Riches No Longer Passes Through College

Tyler Durden's picture

... at least statistically speaking. Yes, outlier cases will always exist and there will always be a rags to Geology 101 to riches story somewhere, but as the following fascinating and very much damning (the entire higher learning industry of the US) diagram from Reuters demonstrates, colleges, in their once vaunted role of a "great equalizer for the classes" as defined over a century ago by Horace Mann, no longer exist.

The chart in question?

What does the above chart imply? Nothing more than that for the vast majority of people, college degrees are the modern-day equivalent of very, very expensive snake oil.

Yes: colleges are sold to you as the critical stepping stone on the path to wealth and prosperity, but sadly the empirical evidence demonstrates that when it comes to an actual, demonstrable income effect, only the wealthiest people actually benefit from a degree! The lowest fifth of household by income see their change in income decline by 10%, while the middle fifth sees an incremental 2.1% drop. Where do incomes rise? When you are already wealthy and belong to the highest fifth of households by income: there, going to college boosts your income by an additional 15.1%

And since for the great majority (excluding the richest of course), a college education is funded by even more implied poverty, i.e. debt, which is merely the opportunity cost of future income and wealth, the simply math works out as follows: college - a tool for making the rich richer, the poor poorer, and virtually everyone (excluding the richest, again, of course) a debt slave into a system that beguiles impressionable youths with dreams of money and power, and cheap low interest private and Federal student loans, only for the illusion to shatter upon graduation and all those wonderful jobs demanding a piece of paper procured in exchange for 4 years of debt-funded classes, turn out to have been a mirage all along...

In short: the only hope for a great many people is nothing but a debt trap.

From Reuters:

Just to stay even, poorer Americans need to obtain better credentials. But that points to another rich-poor divide in the United States. Educators call it the scholastic "achievement gap." It has been around forever, but it's getting wider. Lower-class children are getting better educations than before. But richer kids are outpacing their gains, which in turn is stoking the widening income gap.

 

"Now, we're in a situation where we need to educate everyone at the level of the elite in the past," said Paul Reville, Massachusetts secretary of education. "We don't have a system to do that."

 

It's an academic arms race, and it can be seen in the sharply contrasting fortunes of Weston, a booming Boston suburb, and the blue-collar community of Gardner, where a 20-foot-tall chair sits on Elm Street as a monument to the town's past as a furniture-manufacturing hub.

 

* * *

 

This correlation between educational attainment and financial fortune is clear statewide. In the bottom fifth of Massachusetts households, the average income dropped 9 percent in the past 20 years to $12,000. They fared worse despite a sizable gain in educational attainment: The share of people 25 and older in the group with a bachelor's degree rose to 18.5 percent from 11 percent.

 

The same thing happened to the middle fifth. Their average income slipped 2 percent to $63,000. The share of adults with a bachelor's rose to 43 percent from 29 percent.

 

But the top fifth saw their average income leap 17 percent, to $217,000, as their education levels soared far higher. Three-quarters had a bachelor's, up from half. Fully 50 percent had a post-graduate degree, up from a quarter.

 

* * *

 

"All the evidence shows that children born to two highly educated, high-income people tend to obtain the highest level of academic achievement," said Sum. "At the bottom, where the mom is not that well-educated and tends to have lower income, children tend to do worse."

 

* * *

 

Curtis Dorval, works at Walmart as well. When he was a senior at Gardner High School, Curtis was class president. He was accepted by Northeastern University, a private school in Boston.

 

But Northeastern cost $50,000 a year, which Curtis, then 17, felt he couldn't afford. Instead, he enrolled last year at the state-run University of Massachusetts Amherst, studying mechanical engineering. With the help of a scholarship for graduating in the top quarter of his class, Curtis paid $10,200 a year.

 

He got some help from his father, who had saved up $10,000 in stocks and bonds from his days in the hospital job. This summer, that money ran out and Curtis left UMass to enlist in the Air Force. He will serve as an airman - and hopes to use military benefits to pay for parttime university classes.

 

"The main reason was I needed a way to pay for college," he said.

Most don't go that route: most opt for cheap, low-rate debt. Debt which as of this moment, merely at the Federal level has by now surpassed $1 trillion, and which, as we reported first, and as subsequently was confirmed by the media, is seeing its delinquency rate explode, now that the clash between hope and the sad jobs reality is front and center for ever more once hopeful students.

Just like with the "gun-control" debate, there is no simple solution.

Tanner Skenderian, president of this year's Weston High graduating class, joked in a speech about her town's hyper-competitive students. "Welcome to Weston, where third graders take AP Physics, middle-school students sleep for 42 minutes a night, and the most competitive race run by the 2012 boys state champion track team was the race to get the cookies in the cafeteria," she said.

 

Competition in high school was fierce. In one advanced placement physics class, she said, six of the 12 students were the children of professors at MIT, America's premier science university.

 

But Tanner thrived there. She also found school to be a source of support after her father died while she was in middle school. This fall, she headed to Harvard, after spending the summer interning at the governor's office. Given the job market, she said she may apply to business or law school after graduating.

 

Weston, in short, gave her an education that raises her odds of joining her mother - who owns a marketing and event-planning company - at the top of America's economic ladder. 

 

"We're very fortunate that we're rather affluent," she said. "We have more opportunities, more technology, more classes and more teachers."

And that's just it: if you are affluent, if you had opportunities, you will still and always be successful, and college will merely emphasize this. For everyone else, degrees are rapidly converting into an almost instantly amortizing piece of paper paid for with tens of thousands of student debt which, incidentally, is non-dischargeable.

Unfortunately, and just like with "gun-control", the fundamental issue at hand is not education, not even the pursuit of the American Dream (or lack thereof), but the gradual realization that the myth of American exceptionalism is just that. And in a world as globalized and interconnected as ours, breaking from the middle (or, heaven-forbid) lower classes, into the upper strata os society is becoming virtually impossible.

It goes without saying that any society in which class mobility is shunted, and in which classes (already engaged in class warfare based on wealth, sex, race, religion, background, job, or any other vertical that served America so well during its "melting pot" days) are denied even the ability to dream and hope of improving their lives through hard work (either current, or deferred - and prepaid for by student loans) is one whose days are numbered.

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Citxmech's picture

My wife worked intimately with quite a few foreign PhDs, and according to her, they were every bit as sharp as the "homegrown" scientists that she worked with.

IllusionOfChoice's picture

Gotta agree. The communications barrier for people without full English proficiency is huge.

I have seen lots of flaws with the feedback loop for evaluating this type of worker and there seems to be no analysis of the "advantage" of using cheap offshore workers in terms of dollars, time, or quality of deliverables.

Freddie's picture

Many of them do not have degrees in anything.  They lie and bluff there way through.   All the best programmers I ever met were Americans.  A few europeans and Russians too. The Russians/Ukrainians are impossible know it alls.

brettd's picture

People growing up in American Culture are different:

Most other countries manage problems.

Americans solve them(....Or we used to.)

miker's picture

Today, the vast majority of college 'graduates' have mediocre degrees and aren't really that smart, truth be told.  That's because colleges and universities set up the 'production line', lowered the requirements (to get in and graduate) and basically dummed down the whole institution of higher learning to make a bunch of money.

So naturally, the kids coming out have pretty worthless degrees, lots of debt and aren't all that smart/resourceful to boot. 

The entire intellectual establishment really ought to be ashamed of themselves for what they've done.

A. Magnus's picture

"The entire intellectual establishment really ought to be ashamed of themselves for what they've done."

What makes you think that wasn't the plan to begin with? George Carlin said it best:

"Corporations don't want educated people, they want OBEDIENT WORKERS - people just smart enough to run the machines but dumb enough to not figure out how they're being shafted."

NotApplicable's picture

It's gonna really suck watching Carlin get redefined via the memory hole (ala Twain). Video might help, but I'll bet YouTube, et al., will have that loose end tied down before too long.

In a hundred years, he'll be known only for "Seven Dirty Words" and his football skit. All of his political musing will just disappear.

IntuitiveAnalyst's picture

Something that would be more telling would be to break down the TYPE of degrees earned within those brackets. Perhaps there is a higher % of Finance, Engineering, Computer Science degrees in the highest bracket while more Liberal Arts type degrees in the lower brackets? 

NotApplicable's picture

Most of those degrees are still superflous in the Dark Ages 2.0.

How many engineers does it take to not build something?

American Sucker's picture

As a STEM grad, I hope this ends the derision of humanities majors.  If every humanities grad got a chemical engineering degree instead, they'd still have nowhere to work.

nufio's picture

now that you mention it.. a lot of people who take up psychology actually start off in stem fields but then find it too hard to continue with the dorm parties. so they change their major. 

well some never even try the stem majors. Also not all STEM majors provide good career opportunities.

mccoyspace's picture

Which is why in NYC the educational race begins well before Kindergarten.
A good pre-school increases the chance of getting into a good private school beginning at pre-K. All at upwards of 30k a year. Gotta love that.

Temporalist's picture

These are the type of people sending their children to pre-pre-pre-k.  This is for "success"!:

Busy Bee

http://www.youtube.com/watch?v=2_KrSWI8F2E

 

We met at Starbucks:

http://www.youtube.com/watch?NR=1&v=lQKdEdzHnfU&feature=fvwp

Freddie's picture

They all voted for islamic.

I know a few working people in Manhattan.  It is all about covering each others back against management and keeping your job.

kito's picture

Bottom line is if you want a profession....engineer, physician, lawyer, accountant, etc......college is required.....as well it should be......but if you have no clue what to do with your life and you decide to major in political science......DON'T DO IT IF IT'S GOING TO PUT YOU IN DEBT.......

FireBrander's picture

Without a college degree, it's hard to get that corporate job where everyone above you gets insanely wealthy while you struggle to survive.

edifice's picture

Oh, I thought that's what happened with a college degree...

dwdollar's picture

Unfortunately a bank or the goverment won't loan a high school graduate 40k to start a business without that graduate jumping considerable hurdles. People go where the easy credit takes them.

A. Magnus's picture

No, but they'll loan out QE infinity to elitist asshats who couldn't properly run a financial business if they paid professionals to do it for them. It's ALL about who gets blown, not who deserves a shot based on merit...

juggalo1's picture

Those statistics don't back your thesis.  There are two critical flaws in your argument:

1)This is snapshot data not longitudinal data.  The chart compares cohorts of current poor / rich people poor with past cohorts of poor / rich people.  That doesn't show anything about who moved where and how education affected that.

2)The data shows that poor people don't get as much education as middle class who don't get as much as upper class.  Education and income are clearly positively correlated.

If your point was educating everyone won't make everyone rich, that seems rather trite.  If your point was getting more education won't help you become rich, the data (which really doesn't address that question) would seem to imply the opposite.

InconvenientCounterParty's picture

Listen up sponges.

Spend your student loans on guns. I have it on very good authority that the guns and ammo are almost gone. It's your last chance to feel like you are in control of your own destiny.

blunderdog's picture

Plus, you'll have a convenient suicide method available if you're not happy with how that pans out, too.

A. Magnus's picture

"Education and income are clearly positively correlated"

Tell that to Bill Gates, college dropout extraodinaire, who said he quit college because he didn't need a piece of paper to tell him that he's any good...

juggalo1's picture

I wasn't talking about every person, I was talking about statistics, and I wasn't talking about all statistics, I was talking about the statistics in the chart in this article that we are commenting on.

Temporalist's picture

He wasn't replying to you.  Don't get your clown pants in a bunch.

Midas's picture

For every Bill Gates there are 1,000 Jeffrey Lebowskis.  It's like Lenin said, you look to who benefits.

Freddie's picture

His dad was a big time attorney and gave him money to buy that version of DOS.   Gates was already smart before he got to Harvard.

He and Jobs were 1 in a billion and were at the right place at the right time.

I was at a Chiptole like place for lunch not that far from a 4th tier university.  One kid was the asst mgr and the other was in college.  They were both pretty desparate talking about careers in the Muslim's "economy."  The asst mgr kid said was think about going back for criminal justice and he was not a cop type.

The opportunities are supporting the prison planet and police state.  

q99x2's picture

That may be true but colleges have lots of things that money can't buy.

q99x2's picture

A college education is still one of the necessary components of a successful revolution.

Dre4dwolf's picture

The only way to become successful beyond middle class, or upper middle class, is to become a banker and become a money changer / printer/lender yourself or to work in government... or to be a union boss manager type of a thing (so you can rob 100s of workers pay-checks for "benefits").

 

NotApplicable's picture

I see a few gang leaders in the hood that do fairly well. Some do so well, they don't even have to get plates on their cars! But hey, I guess everyone can't run drugs out of a city property next to the police parking lot in an unregistered car and get away with it.

Well, it might not be drugs. Maybe they're delivering refreshments in those coolers to the kids playing inside?

centerline's picture

Geology 101.  We used to call it Rocks for Jocks.  Kind of say because it was a cool class for those of us inclined for science.  Like most things, you get out of something what you put into it.

yabyum's picture

I loved "rocks for jocks" also Philosophy 101. Pray we do not undercut the classes that teach us to think

q99x2's picture

Anyone else getting that fat water buffalo looking chick in their online dating ad? I must have pushed a wrong button somewhere.

seek's picture

The brunette one in the white tank top that's not see through? Yes. I'd be DTF the other one with the see-through mesh shirt, though.

No idea why they're using the big one, other than to maybe convince other big girls it's the place to go.

Pareto's picture

I'm still laughing!!!! baahahahahahahahahahahahahaha!  +100....."anyone else getting..............AAAAAAAAAhahahahahahahaha!  fuck thats funny!

tooriskytoinvest's picture

20 Signs That The U.S. Poverty Explosion Is Hitting Children And Young People The Hardest. This Is Easily The Worst Economic Environment That We Have Seen For Young People Since The Great Depression  Of The 1930s

Read more at http://investmentwatchblog.com/20-signs-that-the-u-s-poverty-explosion-is-hitting-children-and-young-people-the-hardest-this-is-easily-the-worst-economic-environment-that-we-have-seen-for-young-people-since-the-great-depression-o/

Long-John-Silver's picture

The US Navy spent a million tax payer dollars and 2 years of training so I could become a Gas Turbine Systems Tech. I then spent another 4 years of on the job training on a Guided Missile Destroyer. At the end on my 6 years in the Navy I converted my Navy training into an engineering degree paid for by the US Army while working for the US Army on M1 Abrams Tank rebuild and upgrade programs. I never set foot on a collage campus until I received my degree. I've made far more money than your typical collage graduate and it cost me nothing but 4 years of hard time on a slave ship.

kalasend's picture

What pct of 18-22 yo would be able to find better things to do if they do not go to college?

Long-John-Silver's picture

Go to a trade school and learn to be a plumber, electrician, HVAC Tech or some other "hands on trade". These jobs pay far more than a typical collage graduate could ever make. Even ASE certified Auto mechanics can make 6 figure incomes.

harleyjohn45's picture

I agree, learn a trade, but immediately open your own repair business.  If you work for someone else, you will make 14.00-20.00 per hour.  Work for your self and easily double that.  I see it every day.  One or two man operations can really make some serious coin.  

Better if you can open an automotive salvage business, every junk yard owner I know is a millionaire. 

are we there yet's picture

All people are not created with equal intelligence genetically, or beauty, or health, or atheletic potential, or eyesight, etc.. Sorry. Very sorry. Wealthy families are more more likely to be intelligent and have intelligent children (although fewer). Sorry again. College does not create intelligence, only help for an intelligent mind to grow. sorry again. So no big surprise to me here, it is just that the truth that not everyone is made for college learning is true. Sorry that that college does not improve the US core of dumbing down of our demographics. Student slave debt loans will not fix this.

Shizzmoney's picture

This

All people are not created with equal intelligence genetically, or beauty, or health, or atheletic potential, or eyesight, etc.

This wa sproven last Friday.  Humans, like all organisms (a peach, for example), are not created the same AND yes, you do get a "bad batch".  It's nature way fo telling you, "If you think you know.....well you don't know shit."

blunderdog's picture

     Wealthy families are more more likely to be intelligent and have intelligent children (although fewer).

That'd be worth studying.  Although it sounds plausible, I've never seen data to suggest it's true.

notadouche's picture

Wealthy families do not have intelligent children at any better rate than any other family on the economic strata.  What they have more of is opportunity.  Intelligence is blind to economics.  Now knowledge is a different story.  However knowledge is out there for the taking regardless of your wealth or lack thereof.  Effort in school and desire to escape poverty can be one helluva motivator to become knowledgeable and create opportunity.  That use to be the american way.  Now we tend to want shield people from poverty and also the feeling of desperation.  We as a society have lost the notion that desperation and perspiration has led to the most creative and amazing outcomes.  Fear of failure and the need to not perpetuate poverty that I endured was the only motivator I needed.  My two brothers on the other hand didn't take the challenge the same way.  They keep reliving the cycle that we so hated as children and they've allowed their children to be exposed the nonsense.  We all came from the same place and had the same opportunities.  We made different choices which led to different outcomes.  Go figure.

notadouche's picture

Bush. Hilton. Kardashian. Al Gore III. Alex Kelly.  Brandon Davis.  Aimee Walton. Nicole Ritchie.  Joe Biden.  Skakel/Kennedy. Palin offspring.  Houston offspring. These are just a few examples of offspring of the rich that would hardly classify as highly intelligent.  Money can buy a lot of things but it cannot buy an intellect.  It can tend to hide the lack of one though. 

the_cannibal_animal's picture

Somebody up there mentioned finance as a high-income degree, so I thought I'd chime in:

I was a finance major for three years and I will tell you it's a crap degree.  The only offers I seemed to be running into were for selling insurance and other crap work.  So I switched into accounting and I'm with a Big Four now.  It won't lead to making huge investment banker money, but given that I was at a mid-tier state school (should have applied to way more schools than just mine and UChicago...) that wasn't going to happen anyway.  After all, those jobs are reserved for people from schools that don't even teach finance or accounting *coughHarvardcough*.   I started in the lower 50s in a dirt-cheap part of the country and have a kickass benefits backage.  Relative to most of my peers, I won.  I'm just glad I was lucky enough to discover my poor choice in major while I still had time to change it.

If you're studying finance at a non-target school, the chances you will get that investment management job you're after are effectively zero unless you can leverage frat connections or are willing to put up with cold-calling and glad handing through dozens or hundreds of people to make it happen.  Me, I took all the rejections as a message from the universe that I wasn't wanted, so I went where I was wanted.

JOYFUL's picture

Your story is instructive, but needs exegesis...

you studied finance, but can't find work in top tier financial outfits...except in backwaters peripheral to the economy...those who do indeed get the big prize are not even trained in finance or accounting...you "took all the rejections as a message from the universe that I wasn't wanted"... you did everything right but you didn't understand one thing - because

like this whole piece, your thinking is legacy, antiquated by the changed circumstances of the society in which you live. That's not your fault, you've been trained to ingnore the evidence in front of you and accept the ceiling imposed upon your caste. The ''financial sector" is a shell game reserved for the scions of the moneychangers, who long ago leveraged their control over the field of education into a selection mechanism whereby goys are shunted out of positions of power and influence(except for carefully selected & pre-manipulated minions who obey orders)to take their place as tax serfs of the kosher mafia ruling over you.

Use of  sociological jargon like "class mobility" merely disguises the reality: a caste of talmudist dual citiizens lords it other the rest of society, and is gradually tightening the screws...and college is now nothing more than another means of extracting earned wealth from the citizen-serfs at the same time as indoctrinating their kids into acceptance of their sorry station and fate.